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The city itself acts as a platform for entrepreneurial ecosystems

A recent Economist report by Ludwig Siegele examines how the business model, and culture, of the new entrepreneurial culture radically differs from the Fordist, all-under-one-roof mode of production that immediately preceded it:

[T]he world of startups today offers a preview of how large swathes of the economy will be organised tomorrow. The prevailing model will be platforms with small, innovative firms operating on top of them… In some ways, [entrepreneurial] ecosystems can be seen as exploded corporations. Finance departments have been replaced by venture-capital funds, legal ones by law firms, research by universities, communications by PR agencies, and so on. All are nodes in a loose-knit support network for startups that does what in-house product-development teams used to do.

This combinatorial approach to business is fundamentally well suited to dense urban fabric, which relies upon smaller increments of development — and thus intrinsically offers the choice and flexibility demanded by both contemporary consumers and the experimental businesses that serve them. In a sense, both the urban grid and the urban fabric are just platforms for business growth: an urban business district has higher costs — but compared to an insular suburban corporate campus, it’s an “exploded” ecosystem of firms that each do their own thing well, and thus maximize their own productivity. Instead of a single mediocre cafeteria, we demand — and increasingly get — more and better choices. The urban collage has found its counterpart as a business model, and naturally the two get along swimmingly:

[S]tartups are doing what humans have always done: apply known techniques to new problems. The late Claude Lévi-Strauss, a French anthropologist, described the process as bricolage (tinkering)… [S]tartups are a big part of a new movement back to the city. Young people increasingly turn away from suburbia and move to hip urban districts, which become breeding grounds for new firms.

In turn, each of these specialist firms needs to generate its own economies of scale:

Tom Eisenmann of Harvard Business School explains that startup colonies are platforms with strong network effects, a bit like Windows and Facebook: the more members they have and the more activity they generate, the more attractive they become.

In researching the AIA’s Cities as a Lab report last year, I chanced upon a single image that I thought encapsulated the possibilities of how the startup mentality has fundamentally altered business and cities: the Off the Grid food court, seen at the top of this post visiting proxy in Hayes Valley. (Photo by Niall Kennedy.)

Sure, back in 1993, I would have expected that by 2013 someone in San Francisco would have a renewable-energy restaurant. Individually, all of the ingredients in this scene existed in 1993: the Hayes Valley neighborhood, left-behind spaces by freeway overpasses (this was a segment of the Central Freeway), roadside flea markets, architects as developers (think John Portman), shipping containers, food carts/trucks, photovoltaics, LEDs, point-of-sale systems, etc.

What’s changed since then is that each of these have evolved, thanks more to regulatory than technological innovation,* into ready-made, easy-to-use, off-the-shelf platforms that can be “recombined” into an endless set of novel experiences — the very essence of what makes urban life so exciting.

* Read the full report for more! Even more telling is the chapter outlining how different districts around the Research Triangle were shaped by how different planned districts have flourished by matching their respective eras of innovation — beginning with corporate campuses in 1960s Research Triangle Park, moving on to the university-led model planned in the 1990s at Centennial Campus, and finally coming full circle to new entrepreneurial ecosystems in downtown Durham (and a future “downtown RTP”).